TOPEKA — The clock is ticking on consideration by the Kansas Legislature of an extraordinary economic development incentive plan recommended by Gov. Laura Kelly to improve prospects of landing a major manufacturer expected to inject $2.5 billion annually into the state’s economy.
Kansas survived a review process that began 10 months ago to become one of two state finalists for the project — no company name yet — that a Wichita State University study showed could create thousands of jobs through corporate investment of $4 billion and a package of government incentives. It would deliver an estimated 4,000 direct jobs and have a total employment impact of 7,800 jobs tied to $440 million in annual labor income. There could be a temporary expansion of 16,500 jobs.
The manufacturing plant’s estimated output at full production — think of an operation consuming 3 million square feet of building space — would be $1.8 billion annually, according to modeling by WSU’s Center for Economic Development and Business Research.
Parts of the WSU report were redacted to conceal identity of the prospective company, but the document noted Kansas had an established business sector in the targeted manufacturing field with the second-highest concentration of employment and wages in the nation.
For those engaged in guess work, Kansas officials said the target of the competition wasn’t Boeing and the rival state wasn’t Missouri.
“We finally have a chance to not only catch up to our competitor states, but beat them and supercharge the rate of growth in our state by landing this whale of a project,” said David Toland, who serves as lieutenant governor and as secretary of the Kansas Department of Commerce.
The Kelly administration recommended the Legislature efficiently finish work this week on an economic incentive bill aiming financial support at companies making a minimum investment in Kansas of $1 billion over a five-year period. The Attracting Powerful Economic Expansion Act, or APEX, would feature comparable tax benefits for suppliers with $10 million or more in annual sales to the manufacturing giant.
“It’s a much larger opportunity than anything the state has seen in its history as far as it being a realistic possibility for the state to win it,” Toland said in an interview. “We’ve been encouraging a clean bill that moves swiftly and gets to the governor’s desk this week so we can put forth an offer that will beat our competitor.”
The state’s final bid would need to be submitted in the first week of February, Toland said, so the company could make a site selection later in the month.
Incentive bill on the clock
The legislation would offer the megaproject company a 15% investment tax credit, reimbursement of up to 10% of payroll costs for up to 10 years and a 100% sales tax exemption on construction materials. A separate 50% property tax incentive would be available to the manufacturing company and up to five of its supplier companies if participating in a foreign trade-zone program, assuming local governments consented.
In addition, up to 50% of new employee training and education costs up to $5 million annually would be reimbursed to both manufacturing and supplier companies.
The supplier companies would score a 15% investment tax credit, retain a maximum of 65% of payroll withholding tax for 10 years and also qualify for the training reimbursement as well as the partial property tax exemption and full sales tax exemption on construction.
The package crafted by the Kelly administration was introduced last week in the Senate Commerce Committee. It would target employers in advanced manufacturing, aerospace, logistics, food, agriculture and technical services. Hearings in the Senate committee revealed support for the bill from the politically influential Kansas Chamber and backing among local chambers of commerce.
Eric Stafford, the main lobbyist for the Kansas Chamber, said expansion of gross domestic product in Kansas had lagged competitor states for years. The state also has endured a decades-long decline in population as young adults moved to other states for better jobs, he said.
